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How to Consolidate Your Debts in Connecticut

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In a Nutshell

If you’re interested in exploring the possibility of consolidating your debt, you’ll need to carefully assess your income, expenses, spending habits, credit history, and the types of debt you’re interested in consolidating. If you ultimately choose to consolidate your debt, you’ll likely need to secure a loan or work with an agency to construct a debt management plan. 

Written by Attorney Kassandra Kuehl
Updated March 26, 2021

When you’re trying to keep your debt under control and hoping to raise your credit score, having to make payments on multiple debt-related accounts every month can be frustrating, counterproductive and downright dangerous. Every time you have a late payment on an account, your credit score takes a hit and you incur a late fee. Additionally, keeping track of all these payments can be difficult. Finally, you may be paying unreasonably high-interest rates on your auto loans, student loans, credit card debts, medical bills, home equity loans, and other secured and unsecured loans. Thankfully, there is a solution to this frustrating challenge. If you consolidate your debt, you’ll combine those debts into a single loan. The loan will likely feature a lower interest rate than you’re paying on many of your debts now. You’ll also likely have a lower monthly payment for your debts. Finally, making a single monthly payment is usually easier than making different payments on different due dates for numerous accounts. Debt consolidation works a few different ways, depending on your approach. You’ll need to decide which consolidation option is right for you. Chances are, you’ll want to secure a Connecticut debt consolidation loan and use it as a balance transfer to pay your existing debts. That way, you’ll only have to pay the remaining consolidated monthly payment, likely at a lower rate and low-interest rate.

Learn More Through Free Nonprofit Credit Counseling

Debt consolidation is a significant commitment. Therefore, it’s important to make sure that you’re making an informed decision before you take out a personal loan, a home equity loan, a credit card balance transfer, or take advantage of other loan options to consolidate your debt.  You can learn more about whether debt consolidation may be right for you by attending a free credit counseling session with a certified credit counselor. Several nonprofit credit counseling agencies in Connecticut offer this valuable service to anyone who wants to explore their options. Your credit counselor will ask about what you earn, what you owe, your monthly bills and your financial goals. Once your counselor evaluates your finances, you’ll receive a personalized action plan. Debt consolidation may be one of the recommendations included in that plan.

How to Consolidate Your Debts in Connecticut

If you’re interested in exploring the possibility of consolidating your debt, you’ll need to carefully assess your income, expenses, spending habits, credit history, and the types of debt you’re interested in consolidating. If you ultimately choose to consolidate your debt, you’ll likely need to secure a loan or work with an agency to construct a debt management plan.

Collect the Details About Your Debts

If you haven’t requested a free copy of your credit report recently, it’s time to do so. You won’t be able to accurately assess whether debt consolidation is a good option for you unless you know exactly what types of debt you owe, their totals and their interest rates. Accessing your credit report will allow you to easily evaluate your current debts in detail. It is also helpful to track down what your minimum payment is monthly for each of your debts. That way, you’ll be able to calculate whether consolidation would lower the monthly rate of your debt payments. Your credit report will also feature your current credit score, which will help you determine if you have good credit. You won’t necessarily need good credit to consolidate your debts, but a good credit score can be helpful in securing loan terms that don’t include high-interest rates.

Determine Your Monthly Income

Debt consolidation is a money management strategy that works best when a household’s income can reliably cover its expenses and the consolidated debt payment at the same time. To determine whether your financial situation is ideally suited for debt consolidation, you’ll need to look at your income. It’s important not just to know how much you make monthly but also how reliable or irregular your income is. For example, if you take home a paycheck in the same amount every two weeks in addition to a reliable monthly child support check, your reliable income is going to be easy to determine. If you’re a freelancer whose work is unsteady, it may be harder for you to make steady debt consolidation payments in full and on time.

Put Together Your Budget

The final aspect of your finances you must evaluate before you can make an informed decision about debt consolidation is your expense-related budget. You now know what you owe and what you earn. It’s time to look at what you spend. Each month, your household incurs fixed, unfixed, and irregular expenses. Fixed expenses are most predictable because they don’t change from month-to-month. Rent, car insurance, student loan payments, and car loan payments are examples of predictable expenses that occur each month and cost the same every time. By contrast, unfixed expenses occur each month but don’t cost exactly the same every time. Food, utilities that fluctuate seasonally, credit card debt balances, and gas are examples of unfixed expenses. Finally, irregular expenses are predictable but don’t pop up every month. For example, you know that your car needs regular oil changes, but it doesn’t need an oil change every month. To factor an irregular expense into your budget, add up its total cost per year and divide it by 12. This figure will indicate how much you need to budget monthly to reliably cover this cost annually.

Do the Math

Now that you have detailed breakdowns of your debts, income, and expenses, it’s time to compare and contrast. If the cost of your monthly debt payments and your expenses is less than your monthly income, you’re in good shape. This isn’t to say you should forget about consolidating your debts. Debt consolidation can help to lower your monthly debt payment amount, lower your interest rates overall, and streamline your debt repayment process. It still may be an option worthy of your consideration, even if your math “adds up.” If your monthly debt payments and household expenses are greater than your income, debt consolidation may or may not be in your best interest. If your income doesn’t cover your expenses, let alone a consolidated debt payment, you may want to speak with a credit counselor about more significant debt relief options, like bankruptcy or debt settlement. However, if your income can stretch to reliably cover both your expenses and a consolidated debt payment, debt consolidation may work to your advantage.

Review Your Connecticut Debt Consolidation Options

If debt consolidation is a good option for you, it’s time to determine which approach will work best for your financial situation. For example, if you’re a homeowner, you may want to look into a home equity loan or HELOC and use that loan as a balance transfer. If you’re close to your parents and they’re eager to help, you may be able to use a personal loan as a debt consolidation balance transfer. If your credit card debt isn’t extreme, you may be able to secure a credit card balance transfer. If you don’t want to secure a new loan, you can work with a nonprofit credit counseling organization (which is not the same thing as a debt settlement company) to negotiate a debt management plan. However, chances are that your safest option will involve working with a reputable lender to secure an unconsolidated debt consolidation loan. Be wary of unreasonable loan terms, high origination fees, and offers you receive in the mail. Each of these should serve as a red flag that you should work with an alternative lender.

Apply for a Connecticut Debt Consolidation Loan

If you’re not using a personal loan or entering into a debt management plan to consolidate your debt, it’s time to apply for a debt consolidation loan. There are many reputable lenders in Connecticut and throughout the United States. However, there are also many scammers eager to take advantage of individuals seeking debt consolidation opportunities. Take time to research the credentials and reputation of any lender that you may be interested in working with. Consider going to the websites of the Better Business Bureau and the Connecticut Department of Consumer Protection to see whether a lender that interests you has been cited for unacceptable behavior. A little research now can save you considerable headaches down the road.

How to Stay Current with Payments After Consolidating Your Debts in Connecticut

Once you’ve consolidated your debt, you’ll likely feel relief at taking a proactive financial step and trepidation about falling back into a place where you’re responsible for multiple debt payments each month. These conflicted feelings are normal. Completing a successful debt consolidation is a reason to celebrate, even if your origination fee is high enough to make you wince a little. But it’s also normal to worry about falling back into unmanageable debt. To stay current on your payments, make sure to budget carefully and to adjust your budget when your income or expenses change. Also, consider moving the due date of your payment if you’re being billed at a time of the month when your budget is already considerably stretched.

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Connecticut Debt Management Plan

If you can’t secure a personal loan, a home equity loan, or another kind of Connecticut debt consolidation loan, you may be able to consolidate your debts through a Connecticut debt management plan. A debt management plan doesn’t require a new loan. Instead, you’ll work with a reputable nonprofit credit counseling organization to negotiate new payment plans for your existing unsecured debt and possibly some of your secured debt. The repayment terms of your consolidated loans may feature a lower interest rate than you’re paying now. Moving forward, you’ll make monthly payments to the organization, not your creditors. The organization will distribute your monthly payments on your behalf.

Connecticut Debt Settlement

If you work with a reputable debt settlement company and you have the funds available to make this option work for you, debt settlement can be a great debt relief option. Unlike debt consolidation, Connecticut debt settlement requires you to pay the total amount your creditor requires in a single payment. During the debt settlement process, creditors will usually agree to reduce your principal and waive late fees if you can pay enough of your balance due that they are willing to close your account. If you have bad credit and you have access to the funds your creditors require, this may be a good way to make your financial situation more manageable.  

Connecticut Bankruptcy

If your income is either so irregular that debt consolidation won’t work for you or your debts are so overwhelming that you can’t reliably afford to make a Connecticut debt consolidation loan monthly payment, it might be time to explore the process of filing for bankruptcy. If you don’t make much income, you may be eligible for filing assistance at no cost. The process of filing for Connecticut bankruptcy may seem intimidating but if it’s the best option for you, it can help you to become debt-free and raise your credit score over time.

Written By:

Attorney Kassandra Kuehl


Kassandra is a writer and attorney with a passion for consumer financial education. Outside of consumer law, she is focused on pro bono work in the fields of International Human Rights Law, Constitutional and Human Rights Law, Gender and the Law. Kassandra graduated from Universi... read more about Attorney Kassandra Kuehl

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